States That Require Franchise Registration

By Pamela Gold

When it comes to franchising, not all states are created equal. Some states require franchisors to register their opportunity. In 35 states in the U.S. a franchisor can immediately sell their opportunity as long as a current UFOC (Uniform Franchise Offering Circular) is provided to the prospective buyer at least 10 business days before any contract is signed and any money is paid. However, for 15 states, there are additional requirements that must be met.

Why Do Certain States Require Franchise Registration?

States that require franchisors to register their opportunity give franchise purchasers legal rights, such as the right to bring a lawsuit upon the franchisor if any state disclosure requirements are violated or omitted. These states have franchise investment laws that require a franchisor to register their UFOC with the state and meet additional disclosure requirements. In these states, the sale of a franchise is treated like the sale of a security -- the states are taking measures to protect investors.

Exemptions Do Apply...

It should be known that many, but not all, states who require franchise registration have exemption laws that may be met by certain franchisors. Generally, a franchisor with a large and stable net worth or a franchisee who has a large net worth may be exempted from standard registration requirements. Again, this law will vary from state-to-state.

Registration States and Corresponding Agencies

In the following 14 states, the corresponding agency is responsible for registering authorized franchises in that particular state:

Disclosure-Only StatesThe following state requires that a disclosure be on file only:

OregonDepartment of Consumer and Business Services, Division of Finance and Corporate Securities
Salem: 503.378.4140

What About Business Opportunities?The states and the laws referred to in this article are for franchise opportunities only and do not, in any way, regulate the sale or offering of business opportunities. There are currently business opportunity laws and regulations on both national and state levels.